Building society announces closing of DB fund
UK - West Bromwich Building Society has announced it is closing its defined benefit (DB) scheme to existing members from next month.
The building society originally closed the £48.1m (€55.6m) DB scheme to new members in 2002, however as part of an "overall review of salary and costs" the 250 existing members will be moved to a new defined contribution(DC) scheme as of 1 August 2009.
West Bromwich, which had to restructure its capital requirements to meet FSA stress-testing levels earlier this year, announced in its annual report in June that the changes would lead to an £15m reduction in operating costs.
However despite the closure of the scheme, figures from the annual report showed the pension fund had a deficit of £1.6m at the end of March 2009, and in 2009/10 employer contributions are expected to total £1.6m plus an additional £1m as part of a recovery plan agreed with trustees.
In addition, while the value of the pension fund's assets dropped over £10m, from £58.5m to £48.1m over the year, the pension liabilities also reduced significantly from £63.6m to £49.7, reducing the deficit from £5.1m to £1.6m.
The announcement from West Bromwich follows similar moves in recent weeks by larger companies such as BP and Morrisons, as well as Barratt Developments and Archant, although Barclays is potentially facing strike action over its decision to close the DB scheme. (See earlier IPE articles: Fear of DB closures pre-empted tough week for pensions; Barratt closes DB as deficit exceeds €100m and Barclays faces strike threat over DB closure)
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